Resources: Energy, BTC Pipeline, Caspian Region

In March 2011, following a Complaint lodged under the OECD Guidelines for Multinational Enterprises by six environment and human rights groups (including The Corner House) back in April 2003, the UK government ruled that oil multinational BP is breaking international rules governing the human rights responsibilities of multinational companies in its operations on its Caspian oil pipeline.

A BP-led consortium is breaking international rules governing the human rights responsibilities of multinational companies in its operations on the controversial Baku-Tbilisi-Ceyhan oil pipeline, the UK Government ruled today.

After the BTC Consortium, led by BP, formally asked the UK's export credit agency, ECGD, for financial support for its BTC oil pipeline project, ECGD's Business Principles Unit (BPU) assessed the potential environmental and social impacts of the project. The BPU's findings and recommendations were critical to ECGD's issuing significant financial guarantees for the project in February 2004.

When The Corner House put in an information request for a copy of the BPU's report, it was refused. Only after appeals and counter appeals was the information finally released in August 2009.

The route of the BTC pipeline from Armenia through Georgia to Turkey passes in or near seven existing conflict zones, including South Ossetia and Armenia. The Corner House raised this issue with the UK’s export credit agency, ECGD, the National Audit Office and the Environmental Audit Committee of the UK Parliament.

This article summarises the main issues arising from the BTC oil pipeline runing from Baku in Azerbaijan, through Tbilisi in Georgia to a new marine terminal at Ceyhan on Turkey’s Mediterranean coast that has been developed by a consortium of companies led by the British oil multinational BP. These include the project agreements between the consortium and the three countries; safety concerns; and concerns over due diligence and monitoring.

This Bloomberg Markets article describes the allegations by BP consultant Derek Mortimore that the engineering company contracted to monitor the BTC oil pipeline has no experience in pipeline corrosion work.

The legal agreement signed by Turkey with the company building the BTC pipeline breaches the country's legal obligations to the EU aimed at it becoming an EU member. The European Court ruled in March 2006, however, that EU's decisions (and lack of decisions) on accession issues are a matter of discretion and internal concern alone, and cannot therefore be challenged through the courts.

The Common Terms Agreement, signed between the public sector lenders to the BTC oil pipeline project and the BP-led consortium building it, includes the environmental and social conditions to which the consortium agreed to adhere.

Trade and Industry Committee Inquiry into Implementation of ECGD's Business Principles

4 April 2005

The UK Parliament's Trade and Industry Committee held an inquiry into support provided for the BTC pipeline by the UK's export credit agency, ECGD. It focused on allegations that the companies involved knew about safety problems with the anti-corrosion coating chosen to seal the pipeline's joints before it was buried, but did not disclose them to ECGD. Contrary to previous public and parliamentary assurances, ECGD officials admitted to the inquiry that the coating had not been properly tested and it was being used for the first time.

In February 2004, the Sunday Times newspaper published an article by Michael Gillard, detailing reports that the coating selected to seal the joints of the BTC oil pipeline before it was buried was "utterly inappropriate" and could cause the pipeline to leak. This expanded article provides more detail.

The Baku Ceyhan Campaign, of which The Corner House is a part, carried out a detailed study of the Environmental Impact Assessment for the Turkish section of BP's Caspian oil pipeline, and found 173 violations of international standards, including the World Bank's own lending policies.

The "divide and rule" corporate public relations strategy for dealing with NGOs raising issues about the BTC oil pipeline is made explicit in this presentation on the project's Environmental & Social Impact Assessment, released under FOIA.

A February 2004 Sunday Times article alleged that BP knew about safety faults with its anti-corrosion sealant coating for its Caspian oil pipeline, but did not disclose them when trying to secure funding from publicly-funded export credit agencies and multilateral development banks. A UK government minister and officials from the UK's export credit agency gave public assurances that the coating had been used extensively elsewhere on similar pipelines, but subsequently-released documents indicate that it had not.

Between 2002 and 2005, The Corner House and its partners conducted fact-finding missions to areas along the route of the Baku-Tbilisi-Ceyhan (BTC) oil pipeline to gather information about community expectations and opinions, impacts, and the consultation and land expropriation process carried out by the BTC consortium (led by British oil multinational BP) building the pipeline.